Chris Mellor’s recent article on Channelregister.co.uk concerning Dell’s Limerick manufacturing exodus covered various reasons for Dell’s decision. Many of these break no new ground - it is simply the economics of the situation Dell finds itself in. But there were some subtleties that he unearthed that haven’t been stated by many commentators. Firstly, had there been sufficient demand for the notebooks that Dell were producing, then it would have taken both the Irish and Polish plants to satisfy that demand. The downturn clearly put a dramatic dent in the purchasing of notebooks but even before that Dell had been overtaken by HP as the world’s biggest supplier; and both Dell and HP were suffering at the hands of Apple. In June 2008, Jordan Golson reported in The Industry Standard that at Apple notebook sales were up 61% since Q1 ‘07. It seems that the Leopards and Tigers that populate Steve Jobs virtual zoo of operating systems were propelling Macbook sales to new heights while Vista was dragging Windows Notebook sales to down to Davy Jones locker.
Meanwhile a completely new category of computers arrived - Netbooks - small low cost devices, pioneered by Asus and their initial range of Linux-based machines. These began to cut into the low end of the laptop sales and proved to be a disruptive force in the market. After years where people were paying extra money for small form factor laptops, Asus came along and made the cost of small portables proportional to their size, in a game changing move that would haunt the mainstream laptop manufacturers as time wore on. Things got so bad for Vista’s adoption figures that Microsoft had to begin counting Windows XP sales as Vista sales via their controversial ‘downgrade licence’ program that allowed the likes of Dell to continue offering XP as an operating system on the machines they sold and allowed Microsoft to claim that another copy of Vista was now in circulation. But it wasn’t the kind of thing that marketing dreams are made of. Even in August of 2008 research suggested that more than one in three new PCs were still being downgraded to from Vista to XP.
So we set off into 2009 with more battles looming in the desktop, notebook, netbook and server markets. And who knows, maybe a completely new computing category will yet again be invented this year. Apple, Windows and Linux continue to vie for the position as the OS supreme. And with Internet Explorer’s market share falling to 68% from near dominance a few years ago, gaps are still appearing in the browser market that will encourage Mozilla, Google and Apple to continue to innovate with Firefox, Chrome and Safari.
Windows 7 is somewhere on the horizon. It will come too late for Dell and its Limerick workers - will it come too late for Microsoft?